Advance Authorisation - Demed Export - EPC contractor

[Ramakrishna M]

Dear sir,

 

It is understand that the Contractors / Sub-contractors working as EPC contractors or their sub-contractors for setting up  Power Projects, are eligible for the following benefits under Chapter 8(2)(g) of FT P against Deemed Exports. 

 

Deemed Export - Categories of Supply para 8(2)(g)

8.2 Following categories of supply of goods by main / subcontractors shall be regarded as “Deemed Exports” under FTP, provided goods are manufactured in India:

(g) Supply of goods to power projects and refineries not covered in (f) above;

Benefits for Deemed Exports

8.3 Deemed exports shall be eligible for any / all of following benefits in respect of manufacture and supply of goods qualifying as deemed exports subject to terms and conditions as in HBP v1:-

 (a) Advance Authorisation / Advance Authorisation for annual requirement / DFIA.

(b) Deemed Export Drawback.

 (c) Exemption from terminal excise duty where supplies are made against ICB. In other cases, refund of terminal excise duty will be given. Exemption from TED shall also be available for supplies made by an Advance Authorisation holder to a manufacturer holding another Advance Authorization if such manufacturer, in turn, supplies the product(s) to an ultimate exporter.

 It is also understand that the Advance Authorisation will be issued to a manufacturer / supporting manufacturer in India on actual user condition basis

 Advance Authorisation - Para 4.1.3

Advance Authorisation can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) for:

i) Physical exports (including exports to SEZ); and/ or

ii) Intermediate supplies; and /or

iii) Supply of goods to the categories mentioned in paragraph

8.2 (b), (c), (d), (e), (f), (g), (i) and (j) of FTP ;

 iv) Supply of stores’ on board of foreign going vessel

 

In the given circumstances Please clarify....

• Whether an EPC contractor who is executing a power project  construction work, would  partly import and also indigeneously procure Plant and Machinery / goods in CKD /SKD condtion and assemble the same at site of construction and transfer the same to the Owner/Developer of the project, is eligible for obtaining Advance Authorisation ? If so, can he meet the Export Obligation against EPC Works Contract Turn Over done and payments received ?  

• Is that the assembling of plant and machinery, Equipments, etc., at site would amount to manufacture of power generating plant and exigible for payment of Excise Duty or the activity is exempted from payment of ED since they all commissioned and embedded on to the earth?

Thanks and regards,

Ramakrishna M

Hyderabad

8978386060

 

[BHARAT PUROHIT]

DEAR SIRS

 1) POWER PROJECTS MENTIONED AT PARA 8.4.7 ARE ELIGIBLE FOR DEEMED EXPORT BENEFIT. PL CHECK YR PROPOSAL.PROJECT SANCTION FROM POWER MINISTRY IS REQUIRED.

2) ONLY ITEMS RELATED TO MANUFACTURING ( PALNT , MACHINERY ETC ARE ALLOWED TO GET SUCH BENEFIT. ( I.E CONSTRUCTION ITEMS ARE EXCLUDED )

 

 THNX/ B.B.PUROHIT

AI Summary

Deemed export benefit: EPC contractors supplying plant and machinery to power projects may obtain advance authorisation if manufactured domestically. Deemed export treatment under FTP para 8.2(g) allows supplies of plant and machinery to power projects made in India to qualify for Advance Authorisation, deemed export drawback and terminal excise duty exemption/refund, subject to HBP conditions. Advance Authorisations are issued to manufacturers/supporting manufacturers on actual user basis and require project sanction; benefits apply only to manufacturing-related items (plant, machinery, equipment) while construction items are excluded.